FERROUS METALS

UKRAINE

According to data with Metallurgprom Association, over the 1-st quarter of 2001, Ukraine manufactured 6.566 mln. tons of steel, 7.284 mln. tons of iron, and 6.225 mln. tons of end rolled metal products. The output of iron added 6.2%, that of steel +10.8%, and that of end rolled steel articles +13.6% in comparison with the figures reported in the corresponding 2000’ period.

Table 1 exhibits Ukraine’s output of iron, steel, and end rolled metal products over the 1-st quarters of 2000 and 2001.

Table 1. Output of iron, steel, and end rolled metal products in Ukraine (ths. tons)

Over the 1st quarter of 2001, Ukraine exported around 7.042 mln. tons of metal products worth the total of around USD 1.153 bln. This is nearly equal to exports of the last year’s corresponding period in terms of the aggregate quantity shipped (only a 0.04% reduction) although is somewhat higher in terms of revenues (+0.21%).

Semis (primarily, square semis and slabs), just as before, make up the leading commodity group in Ukrainian metal exports accounting for 31% (2.184 mln. tons) in the aggregate physical metal exports from the country. Although supplies of metal semis curtailed by 11% since the 1st quarter of the last year, this commodity group indicates permanently increasing demand on foreign markets. In the report period, metal semis were exported at USD/ton 150-155 FOB, while slabs were sold at USD/ton 135-145.

Flat rolled metal products (sheets and plates) constitute the second most important commodity group in Ukrainian metal exports with 24% of the total physical quantity. From January to March, the country exported around 1.687 mln. tons of sheets and plates, which is nearly the same as in the last year’s corresponding period (0.24% down). Hot-rolled sheets and plates accounted for 1.28 mln. tons of the indicated quantity. HR plates were exported at around USD/ton 165-180 FOB, whereas HR coils – at USD/ton 150-160 FOB.

Long-length rolled metal products also hold one of the leading positions in the Ukrainian metal exports with 17.7% (1.251 mln. tons) of the total. It is notable that export supplies of reinforcing bars continue going up (+44% in the first quarter of the current year), whereas wire rod exports curtailed by 9%. Ukraine-made rebars and wire rods were offered on markets worldwide at around USD/ton 165-195 FOB.

When analyzing statistical data on metal exports, raw materials must be singled out with 21.8% of the total metal quantity shipped from Ukraine (1.54 mln. tons). Exports of the following commodities are also substantial: steel scrap (1.06 mln. tons), iron (256,000 tons) and ferroalloys (224,000 tons).

Table 2 shows some data on metal exports from Ukraine over the 1-st quarters of 2000 and 2001.

Table 2. Ukrainian metal exports

REGIONAL STRUCTURE

In the 1st quarter of 2001, as compared with the last year’s corresponding period, there have occurred no significant changes in the regional structure of Ukrainian metal exports.

Just as earlier, countries of Southeastern Asia and Middle East are the largest markets for Ukrainian metal. These two account respectively for 31% (2.2 mln. tons) and 28% (1.99 mln. tons) of the total quantity of Ukrainian metals exported. It should be noted that Ukrainian metal exports to Southeast Asia are approximately at the same level as they were last year (the meager 0.9% reduction), whereas exports to Middle Eastern countries added 18% in the report period.

Metal exports to CIS countries augmented by 52% in the quantitative expression. In the period of January-March 2001, Ukraine exported around 630 ths. tons of metal products worth USD 177.3 mln.

The African market is rather promising for Ukrainian metal products: exports to this continent continue going up. For example, in the 1st quarter of the current year, Ukraine’s metal exports to this region added 10% reaching 395 ths. tons.

The general data on geographical structure of metal exports from Ukraine are presented in Table 3.

Table 3. Geographical structure of Ukrainian metal exports

A more detailed review of the main markets for Ukrainian metal products will follow.

EU

The main metal articles exported by Ukraine to this market in the report period were semis (45% or 290 ths. tons), steel scrap (21% or 140 ths. tons), and iron (15% or 97 ths. tons). Besides, within the quota, which was imposed earlier, Ukraine exported to the West European market around 44 ths. tons of HR sheets and plates and around 25 ths. tons of long-length rolled metal although there were practically no shipments of CR sheets and plates.

USA

New anti-dumping inquiries on a number of metal goods exported from Ukraine caused major reductions in supplies of these commodities of the Ukrainian origin to this market. As compared with the 1st quarter of 2000, Ukraine’s metal exports to the American market dropped 84%.

On the whole, Ukraine sold around 112 ths. tons of metal products worth around USD 22 mln. to the USA, including rough 50 ths. tons of wire rods, around 35 ths. tons of iron, 13 ths. tons of hot-rolled sheets and plates, and approximately 10 ths. tons of reinforcing bars.

China

A worsening of the situation on the Chinese market and unclear prospects for licensing of metal imports to this country forced Ukrainian metal exporters to curtail their supplies to this market. Over the first 3 months of the present year, Ukraine exported around 145 ths. tons of metal to the Chinese market against 844 ths. tons in respective 2000′ period (-82%). The main exported metal articles were cold-rolled sheets and plates (89.9% of the total quantity, which is equal to 133 ths. tons) and iron (10.1% or 15 ths. tons).

Turkey

In the first 3 months of 2001, Turkey purchased around 771 ths. tons of metal products from Ukraine for the total sum of approximately USD 82 mln. In the quantitative expression, the total exports went 18% down.

The only commodity that indicated an augmentation of exports in the report period was ferrous scrap and waste (+32% to reach 490 ths. tons). It is worth noting that this commodity group contributed 63.6% to the total quantity of metal exported from Ukraine to Turkey.

The following products accounted for the largest shares of the total Ukrainian metal exports to Turkey: hot-rolled sheets and plates (17% or 130 ths. tons) and semis (7.5% or 57 ths. tons). However, on the whole, exports of these two commodity groups went 32% and 66% down respectively.

Russia

High demand for metal products on Russia’s domestic market produced increased exports by Ukrainian metal manufacturers. Over the 1st quarter of the current year, Ukraine exported around 458 ths. tons of metal products worth around USD 143.5 mln. to this market. Physical exports increased 73%, whereas export revenues added 68%.

Russia’s imports of Ukrainian rebars and bars jumped 2.2-2.5 times to reach 76 ths. tons and 102 ths. tons respectively. Ukrainian exports of hot-rolled and cold-rolled sheets/plates increased less substantially (+76% to add up to 88 ths. tons and +37% to reach 26 ths. tons).

METAL EXPORTS IN 2000

Flat rolled steel. Hot-rolled coils

Hot-rolled steel coils are one of the best marketable Ukrainian metal products. Two Ukrainian manufacturers make this type of rolled steel, namely, OJSC Ilyich Iron & Steel Works (ISW), and OJSC Zaporozhstal Iron & Steel Works, which mainly export this commodity.

Exports of HR steel coils topped out in the 1-st quarter of 2000: in this period, along with the growth of physical exports from Ukraine, prices were going up too. However, in the following months, exports of HR steel coils somewhat decreased fluctuating within narrow limits. In the same period, export prices also reduced, which was caused by lower activity of the global market.

Diagram 1 illustrates dynamics of Ukrainian exports of HR steel coils and export prices for this commodity.

 

Diagram 1. Export dynamics of Ukrainian HR steel coils in 2000

Table 4. Average export prices for Ukrainian HR coils in 2000 (USD/ton)

HR steel coils were primarily exported directly by metallurgical mills: OJSC Ilyich ISW (58.5% of the total exports or 1.477 mln. tons) and OJSC Zaporozhstal ISW (41% of the total or 1.03 mln. tons).

The following countries were the most significant importers of Ukrainian HR steel coils: Turkey (26% of the total), China (20%), the USA (8%), Philippines (6%), and Syria (5%).

Hot-rolled plates

These metal products are mainly used in heavy machine-building and construction. However, this commodity is not of high demand on the domestic Ukrainian market. This is why, most of HR metal plates made in Ukraine are exported.

Exports of Ukrainian HR plates were rather stable during the whole first half-year of 2000. Prices exhibited an upward tendency reaching the maximum in July. In the following months, exports of HR plates continued going up whereas prices for this commodity were lowering.

Diagram 2 shows dynamics of Ukrainian exports of and prices for Ukraine-made HR plates.

Table 5. Average export prices for Ukrainian HR plates in 2000 (USD/ton)

 

Diagram 2. Export dynamics of Ukrainian HR plates in 2000

Mainly, two Ukrainian metal-making enterprises exported the indicated commodity group in 2000, namely, OJSC Ilyich ISW (57% of the total or 386 ths. tons) and OJSC Alchevsk ISW (21% of the total or 140 ths. tons). Substantial quantities of HR plates were also exported by Interpipe (9% of the total or 60,000 tons) and OJSC Donetsk Metallurgical Mill (2% or 14 ths. tons).

The following countries imported the largest quantities of Ukraine-made HR plates: Singapore (16%), Taiwan (11%), Slovakia (10%), Malaysia (6.5%), and UAE (6%).

Cold-rolled sheets, plates, and coils

Cold-rolled sheets and plates are widely used in machine-building and allied industries. This is why, many consumers worldwide are highly interested in imports of this metal commodity group. Because of the fact that domestic machine-building enterprises do not indicate substantial demand for these products, Ukrainian metallurgical companies prefer to export them.

Throughout the first half-year of 2000, exports of CR flat metal from Ukraine were high. This situation was caused by high demand for this commodity group on world markets and constantly increasing prices. In the second half of the year, exports declined owing to a general price reduction for cold-rolled metal sheets, plates, and coils worldwide.

Diagram 3 exhibits dynamics of the country’s physical exports of CR sheets and plates and export prices for these commodities.

 

Diagram 3. Export dynamics of Ukrainian CR sheets and plates in 2000

Table 6. Average export prices for Ukrainian CR sheets and plates in 2000 (USD/ton).

Just as in the case with HR steel sheets, plates, and coils, CR sheets and plates are exported primarily directly by Ukrainian metallurgical enterprises, namely, by OJSC Zaporozhstal ISW (66% of the total quantity exported or 815 ths. tons) and OJSC Ilyich ISW (33% of the total or 401 ths. tons).

The list of the five leading countries that purchased Ukrainian CR sheets and plates in 2000 is as follows: China (38%), Turkey (17%), Russia (9%), Algeria (6%), and Vietnam (5%).

METAL MARKET SITUATION IN 2001

Billets and semis

During April 2001, there was a movement on the global market for square billets, which was proven by a spur of business activity on a number of markets worldwide. This situation produced a growth of prices on the corresponding markets.

World Metal experts indicate that in March-April, demand for square billets in South East Asia began to go up. Some growth of metal prices was caused by the beginning of seasonal construction works in the region as well as by increased orders for rebars and wire rods from Chinese consumers. In April, square billets were offered on this market at around USD/ton 178-190 CIF. Philippines and Thailand also exhibited rather high demand for this billet type.

According to forecast, world prices for square billets may further rise in the near future. However, fierce competition on the markets of South East Asia and high dependence of the market for square billets on the situation on that for long-length rolled steel will impede substantial price growth. The increment may come to USD/ton 5-7 at the maximum.

Reacting to favorable tendencies on this market (Southeastern Asia is the largest consumer of metal billets made in CIS countries) Russian and Ukrainian exporters decided to raise prices to the level of USD/ton 155-160 FOB (for all April shipments).

Turkish market was also active in April 2001. The beginning of construction works in many regions of the country produced high demand for long-length rolled metal, which, in turn, led to increased purchases of billets. Consequently, prices also went up to as high as USD/ton 173-190 FOB.

Prices offered by West European and Latin American metal billet producers did not change in the report month and remained at the level registered in March.

Table 7 displays world prices for metal billets.

Table 7. World prices for billets (USD/ton)

Long-length rolled metal (rebars and wire rods)

Export prices for long-length rolled metal (rebars and wire rods) remained unchanged on the EU market in April. Notwithstanding high demand for this commodity group in a number of countries, high imports impeded a substantial price growth. In April, export prices offered by West European manufacturers were at USD/ton 220-240 FOB for rebars and USD/ton 180-195 FOB for wire rods.

The USA’s imposition of final anti-dumping duties on rebars and wire rods substantially reduced imports of these commodities by American companies. American analysts indicated that the duty led to a reduction of stockpiled supplies of the mentioned metal products. However, end consumers exhibited no considerable growth of demand. This is why, there was virtually no increase in prices for rebars on the American market in April. Quotations for rebars settled at USD/ton 260-270 CIF and those for wire rods – at USD/ton 250-260.

Prices for reinforcing bars and wire rods in Turkey did not change in April 2001 remaining at USD/ton 205-215 FOB. Demand was stable on both domestic and import market. This is why, Turkish traders suppose that there are reasons to expect some insignificant growth in prices in the near future.

Export prices offered for rebars and wire rods in April by Ukrainian and Russian manufacturers were unaltered in comparison with the previous month at USD/ton 185-195 FOB for reinforcing bars and USD/ton 175-197 FOB for wire rods.

World prices for reinforcing bars are shown in Table 8.

Table 8. World prices for reinforcing bars (USD/ton)

Table 9 summarizes world prices for wire rods.

Table 9. World prices for wire rods (USD/ton)

Hot-rolled plates

Notwithstanding a stabilization of world prices for hot-rolled plates, forecast for 2nd and 3rd quarters of 2001 is unfavorable.

Export prices for this type of rolled metal in EU countries are still low at USD/ton 290-310 FOB. Moreover, leading European traders believe that the present low prices may further go another EUR/ton 10-15 down as early as in the 2-nd quarter of the present year, because foreign consumers have cut back their purchases anticipating another price reduction.

The American market is indicating a similar tendency. The aggregate quantity of HR plates offered for sale still exceeds domestic demand for this commodity group. Market operators suppose that the prices have already reached their minimum of USD/ton 320-340 CIF despite the adopted import limitations.

Because of their high dependence on foreign markets for their products, Ukrainian and Russian manufacturers had to further reduce export priced in March-April 2001 to USD/ton 175-205 FOB. Experts forecast that they will keep at this level up until the end of the 3rd quarter of the current year.

Table 10 lists world prices for hot-rolled plates.

Table 10. World prices for HR plates (USD/ton)

Hot-rolled coils

Hot-rolled coils are the most dynamic commodity on the global metal market. Nearly all regional markets indicated upward price tendencies in respect of this metal product in April of the current year.

A seasonal (or so-called “winter”) curtailment of rolled coil production in Ukraine and Russia and a new wave of anti-dumping inquiries caused a cutback of export shipments at prices that were acceptable in March. This, in turn, led to a reduction of stockpiled quantity of this product in South East Asian and Chinese ports. On the other hand, this situation somewhat contributed to a price growth (to the level of USD/ton 160-170 FOB).

China has also been indicating high demand for rolled metal coils in the recent months. Some reduction of exports supplies outbound from CIS countries, Japan, and Korea forced Chinese metal importers to reconsider and increase their purchasing prices to around USD/ton 175-195 CIF, as of the end of April.

West European markets showed favorable tendencies in the report month: production augmentations in various industries of the EU countries contributed weightily to increased consumption of rolled metal coils. This is why, a number of companies have already declared that they intend to raise prices for coiled steel in the 2nd quarter of 2001. In April, prices exhibited an upward tendency reaching USD/ton 200-230 FOB at the end of the month.

American HR coil producers announced possible USD/ton 20-30 increase in prices for their products in April. In their opinion, such a growth would have been stipulated by a curtailment of HR coil production and imports. However, to an extent, their supposition as regards curtailed supply of this commodity on the market was a mistake: the number of offers for supply of HR coils remained high indicating only a minor reduction. Prices added USD/ton 5-10 reaching USD/ton 240-245 CIF.

The situation on the Turkish market for HR steel coils was favorable over April. For several consecutive months, export prices on this market have been stable at USD/ton 200-210 FOB.

Table 11 exhibits world prices for hot-rolled coils.

Table 11. World prices for HR coils (USD/ton)

Alexander SHEYKO, expert with DerzhZovnishInform